Evercore Partners Inc. (NYSE: EVR) is a boutique investment bank that specializes in mergers and acquisitions. The company also provides advisory services on divestitures, restructurings, bankruptcies, as well as other strategic corporate transactions.

Now the catalyst today that makes EVR so appealing — and I have a $40 price target on the stock — is that mergers and acquisition activity is heating up these last two months of the year. This is just a tradition, a historical trend, but I expect it to be even stronger this year simply because companies have trillions of dollars in cash sitting in the bank and they’re finally ready to spend it — especially on strategic acquisitions to strengthen their business and expand into other areas. Evercore is well-positioned to take in fees of $5 million to $50 million, with profit margins reaching 75%+ on some of these transactions, with very few expenses. In fact, EVR reported very strong third-quarter earnings today of $0.38 per share. That’s up from $0.29 a year ago and ahead of analysts’ estimates of $0.33. Net revenue was $123.7 million, up 48% from a year ago and 91% from last quarter.

The other reason you want to own EVR is because of its asset management business. Right now it’s only $12 billion. Why do I say “only” $12 billion? Ralph L. Schlosstein, the CEO of Evercore, is responsible for building BlackRock’s $4 trillion asset management business, and he has the same intentions at Evercore. Even $12 billion can make a lot of money because Evercore charges — just like everyone else — a management fee which can be half a percentage point to two percentage points. But the really juicy profits come from performance feeds. And as we know, the market has come back, which means EVR could be booking some nice profit as we go forward.

I have high expectations that this investment bank will one day rival Greenhill, Jaffray, Lazard and maybe even one day grow into another Morgan Stanley.

Evercore is a great buy for my $40 target.

At the time of this writing, Hilary Kramer was recommending shares of EVR to subscribers of her GameChangers investing advisory service.

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